It was my original intention to blog about Marx’s theories and its emphases on economic determinism. It was my original intention to discuss how the notion of economic determinism has come to bear on the argument that economic growth will help democratization in the developing countries. It was my intention to discuss the moderating variables that affect the relationship: economic growth -> democracy.

I will not do that in this post.

It is all too easy to harp about the benefits of capitalism; hence, it is also extremely easy to sweep its ills under the carpet. After all, we’ve been taught that Marx was totally wrong because his economic propositions were crap.

As such, it would do well to end this semester on a different note. To talk about how we can improve the lives of those who are bound by the exploitative shackles of capitalism. To discuss how being inculcated with the virtues of capitalism has connected our hands, but severed our hearts.

I discuss how the exploitative nature of capitalism and a pursuit of its objectives have exacerbated the income-inequality within my country.

I then discuss Marx’s proposition that in a capitalist society, capitalist exploitation stems from the desire to extract surplus value from the worker. And to do so, these ‘workers’ are offered a pittance. These workers are alienated. I bring Marx’s arguments to bear on labor relations at an international level. I do this by synthesizing my argument with Wallerstein’s World-System theory.

Much has been said about Marx and how his theorizations are irrelevant in the 21st century. The exploitative nature of capitalism and the inequalities that capitalism has exacerbated are the last things on one’s mind.

Truth be told, as a policy-maker in my country, I have been taught that the strategies I develop should be geared towards maximizing economic growth. For instance, who cares about setting minimum-wage agreements for local workers if that is going to inhibit foreign companies from coming to Country X, since to increase labor cost is to reduce the economic attractiveness of the nation. As a policy-maker, I have been taught that we should chant the ‘growth at all costs’ mantra.

My country’s existing strategy is one in which we are seeking to be a regional hub so as to create a ‘clustering effect’, a sort of self-sustaining snowball effect whereby being a Regional Hub is of paramount importance because huge firms will relocate to places where 1.) Domestic markets are large and there is a substantial return on investment 2.) There is abundant talent to fill job requirements. 3.) Innovative people 4.) Attractive living (and under the attractive living umbrage, there’s a host of factors like safety, infrastructure and creative offerings. The clustering phenomena occurs in regional hubs since bright talented individuals will relocate to where the largest firms (say,Google) is. And in turn, firms will cluster because that’s where all the talent is located. And because all the huge firms are situated there, powerful law firms will be set-up.

As such, our economy has become overly dependent on foreign talent. This has resulted in increased income and wealth inequality (a perceived correlation with foreign-local income gap). There are of course many reasons for that, for instance, in my country, where land is scarce, the EXCESSIVE influx of foreigners not only take up jobs, it jacks up housing prices, such that the cost of living in almost any part of my country equals living in New York.

As a result of that, I believe that because of the adherence to the neoliberal agenda – or the capitalist agenda, what we are seeing is that, true to Marx’s postulations, there is an increasing inequality between various social groups. Granted, that Marx’s use of the terms ‘bourgeois’, ‘proletariat’, or ‘plebeians’ might be anachronistic, however, one should not disregard the structural similarities of how one social group is ‘marginalized’ as a country pursues the capitalistic course and chants the ‘growth at all cause’ mantra.

I also argue that this inequality has been reproduced on a global scale.

Before carrying on reading, it’d be helpful to first watch this video:

Marx’s theories, do have shortcomings and this has most notably been taken up by Benedict Anderson. According to Anderson, Marxist theoretical perspectives were the dominant form of justification for wars during the 60s to 80s. However, Anderson challenged the generalizability of that claim by arguing that Vietnam invaded Cambodia, China, and Vietnam even though these countries adhered to the Communist ideology. As such, where Marxist justifications based on class relations to the means of production failed to fully explain social realities — since Marx’s clarion call ‘workers of the world, unite’ failed to materialize –, Anderson proposed that wars were fought on national terms.

And it is precisely along national lines that we see how Capitalism is rearing its exploitative head in the 21st century.

I would like to introduce what Immanuel Wallerstein calls the World-Systems theory in order to explain how the structural inequalities that Marx has advanced can be transposed to an inter-national setting.

In the 70s, Immanuel Wallerstein argued that the practice of categorizing specific countries into the ‘third-world’ classes had obscured the fact that this categorization was borne out of capitalistic thrusts. Wallerstein (1976) argued that capitalism, as an economic model, necessitates the expansion beyond the geographical delimitations of the nation-state. Hence, Wallerstein did not accept the categorization of countries into first and third world classes as one that was ‘natural’; rather, this differential status came about because it involved a skewed distribution of rewards. According to Wallerstein (1976), the world system was one in which an uneven distribution of labor had legitimated the ability of some groups within the system to exploit the labor of people from the peripheral and semiperipheral areas. According to this literature, it is precisely because of the way that the peripheral areas are integrated into the world system that the core areas have been enriched since they have been able to extract cheap labor and resources from the peripheries. This unequal exchange, Walletstein argues, can account for the frictions between core areas and peripheral areas.

As such, I argue that it is plausible to view the West, and other developed democracies as the ‘bourgeoisie’ and the countries in the peripheries and semiperipheries as ‘the proletariat’. Think Sweatshops, low-pay, exploitative capitalism.

For instance, in Philippines (Cavite) and Vietnam, the minimum wage is 5 dollars a day. And in these Free-Trade Zones, it is arguable that what the form of economic production puts the locals at a disproportionate disadvantage since foreign companies import their raw materials free and exploit cheap labor rates to produce cheap products that are then sold at an exorbitant cost throughout the core and peripheries. In fact, I would go one step further and argue that discussions about how taxes that are being paid will help the development of the infrastructure are untrue. What happens in these EPZs is that when the tax-holiday provided by the Government is over, these companies simply fold-up their businesses and operate under a different name. This is possible since large MNCs do not own these sweatshops; rather, they have been outsourced to a middleman who, in turn, hires these laborers. When the Government attempts to address the loopholes, these companies threaten to go to other developing countries that can provide a cheaper means of production. So, really, the economic benefit is severely limited.

Given how capitalism has entrenched inequalities when the labor force in the countries in the peripheries and semiperipheries are made to accept lesser and lesser pay (while the profit is maintained by the cores/MNCs), if not the MNCs will just ‘take flight’ to another area which can offer them a better deal, is Marx’s theories really all wrong?

Marx argues that the working class is exploited by the Bourgeoisie (Capitalist West) since the working class is deprived of the profit. While the feasibility of his belief in ‘equitable distribution’ is questionable, it disheartens when segments of his manifesto are played out in this globalized era as MNCs enlist the skills of the working class in third-world nations. While Marx disregards higher wages as a remedy and ignores the economic perspective, I believe that a solution to this inequity between the core and peripheries should be remedied. Ethical amounts of wages benchmarked against Western counterparts should be paid out so they can live properly.